Gold Rises Above $1,400 on Middle East Unrest; Silver Advances

By Nicholas Larkin and Kim Kyoungwha -
Feb 21, 2011

Gold climbed above $1,400 an ounce
to the highest price in almost seven weeks in London as unrest
in the Middle East and concern inflation will quicken boosted
demand. Silver reached a 30-year high and palladium advanced.

Libyan leader Muammar Qaddafi’s son Saif al-Islam Qaddafi
called on protesters to engage in dialogue or face a civil war
that risks “hundreds of thousands of dead.” In the latest step
to curb inflation, China’s central bank said Feb. 18 it would
raise reserve requirements for lenders as of Feb. 24 after
boosting interest rates earlier this month.

“The mix of Middle Eastern jitters and inflation concerns
continues to create a favorable price environment for the
precious metals, particularly gold and silver,” James Moore, an
analyst at TheBullionDesk.com in London, said in a report.

Immediate-delivery bullion added as much as $18.08, or 1.3
percent, to $1,407.60 an ounce, the highest price since Jan. 4,
and was at $1,407.52 at 4:52 p.m. in London. Prices gained for
a sixth day, the longest streak since August. The metal for
April delivery was 1.4 percent higher at $1,408 on the Comex
in New York.

Silver for immediate delivery gained as much as 4.1 percent
to $33.9775 an ounce, the highest price since March 1980.

Bullion rose to $1,403 an ounce in the afternoon “fixing”
in London, used by some mining companies to sell output, from
$1,399.50 at today’s morning fixing.

Anti-Government

Gold reached a record $1,431.25 an ounce on Dec. 7. Concern
about rising inflation and currency debasement drove prices up
30 percent last year for a 10th annual gain. Rising food and
commodity prices have contributed to uprisings in the Middle
East.

Libyan security forces yesterday attacked anti-government
protesters in Benghazi, the nation’s second-largest city. The
North African country has become the focal point of region-wide
protests ignited by the ouster of Tunisia’s president last month
and energized by the fall of Egyptian President Hosni Mubarak on
Feb. 11. Violence has also flared in Yemen, Djibouti and
Bahrain.

“Gold, silver, platinum and palladium are all riding on
investor interest against the backdrop of intensifying violence
in the Middle East,” said Hwang Il Doo, Seoul-based senior
trader with KEB Futures Co. “I wouldn’t be surprised to see
gold rising above $1,500 in the coming month.”

Silver advanced to its most expensive level versus gold in
13 years. An ounce of gold bought as little as 41.45 ounces of
silver today, the lowest amount since February 1998. Silver has
more than doubled in the past year and was last up 4 percent at
$33.9625 an ounce.

Palladium for immediate delivery in London rose 1.1 percent
to $860.15 an ounce after reaching $862.05, the highest level
since February 2001. Platinum was 1 percent higher at $1,852.65
an ounce. Comex floor trading in New York is closed today for
Presidents’ Day.